HJ 4b29 U58 1918 Cornell University Library HJ 4629.U58 1918 War taxation of incomes, ^'"=^®,?,PJ5|MiJ*' 3 1924 008 372 173 WAR TAXATION OF INCOMES, EXCESS PROFITS, AND LUXURIES IN CERTAIN FOREIGN COUNTRIES Prepared in the LEGISLATIVE REFERENCE DIVISION LIBRARY OF CONGRESS Printed for the use of the Committee on Ways and Means WASHINGTON GOVERNMENT PRINTING OFFICE 1918 The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924008372173 CONTENTS. Income tax; I'agu. Great, Britain — Synopsis of income-tax acts 9 Rates of tax — Normal tax 9 Supertax 9 Exemption, abatement, and relief — Exemption , 9 Abatement 9 Relief in respect of — Wife, children, and dependent relatives 10 Life insiu-ance pi-emiums, etc 10 Earned income '. 10 Definition 10 Unearned income 11 Special war provisions — Reduced rates on pay of soldiers, sailors, etc 11 Abatement in case of soldiers, sailors, etc 11 Diminution of profits owing to war 11 Classification of income — Scope of schedules A-E 12 Application of the schedules — Schedule A, landlord's property tax 12 Schedule B, farmer's tax 13 Schedule C, tax on holders of Government sscuiities. 13 Schedule D, tax on business profits, professional incomes, and on sources of income not included under any other schedule 14 C'ase 1, businesses, manufacturers, and concerns in the nature of a business, not contained in any other schedule. 14 Case 2, professions, employments, and vocations not con- tained in any other schedule 14 Case 3, income of an uncertain annual value not charged under Schedule A 15 Case 4, income from foreign and colonial securities 15 Case 5, income from foreign and colonial possessions 15 Case 6, annual income not falling under any other case or schedule 16 Schedule E, tax on salaries of public officials and employees 16 List of income-tax acts in force • 17 Tables showing amount of tax payable on certain incomes and effective rates charged under budget proposals, 1918 18 Canada — Text of Income War Tax Act, 1917, as amended in 1918 19 Income defined 19 Exemptions and deductions 20 Holding companies 20 Nonresidents. 20 Undistributed gains 21 Normal tax 21 Supertax 21 Surtax 22 Corporation tax 22 Deductions allowed — war taxes. 22 Incomes not liable to tax 23 Administrative provisions 23 Comparative table, of rates in Great Britain, Canada, and United States on portions of income over $5,000 28 3 4 CONTENTS. Income tax — Continued. Page. France — Income-tax laws in effect Jan. 1 , 1918 29 General income tax 29 Tax on industrial and commercial profits .32 Tax on agricultural profits , ,35 Tax on salaries, wages, pensions, annuities, etc 36 Tax on professional incomes ; . 37 Tax on income from securities 39 Tax on income from real estate. . . - - 43 Miscellaneous provisions 50 Excess-profits tax: Synopsis of excess-profits tax laws of various countries 55 A. Allied countries 55 Great Britain 55 Canada 55 Australia 55 New Zealand 56 Union of South Africa . , 56 British Guiana 56 France 56 Tunis 57 Italy 57 Russia 57 Japan ; _ 58 B. Central powers 59 Germany 59 Austria 60 Hungary 60 Bulgaria 60 C. Neutral countries 61 Netherlands 61 Denmark 61 Norway 62 Sweden , 62 Spain ....'.;. 63 Switzerland 63 Text of laws: Great Britain — Excess-profits duty, 1915-1918... 65 Finance (No. 2) Act 1915: Charge of excess-profits duty 65 Accounting period 66 Trades and businesses to which duty applies 66 Determination of profits and prewar standard 67 Adjustments for increased or decreased capital 68 Board of referees. Increase of percentages 68 Excess mineral rights duty 69 Returns 7q Fourth schedule _. 72 Computation of profits [ 72 Prewar standard 74 Capital 75 Finance Act, 1916: Continuance and increase of rate of excess-profits duty 76 Increase of rate of excess mineral rights duty ." " 77 Computation in case of sale of ships 7g Adjustment in case of controlled establishments .....'. 79 Director's fees 70 Profits applied in extinction of previous losses '. gO Accountmg period ] oq Accumulating profits '/_ qq Munitions exchequer payments !]!!!! 80 Deposit of sums for payment ] | ] on Controlled establishments — Board of referee's . ...[.]]][ 81 Exemption of business carried on under the court.'.'..".'. .'.'."... 81 CONTENTS. 5 Excess-profits tax — Continued. Text of laws — Continued. Great Britain — Excess-profits duty, 1915-1918 — Continued. Finance Act, 1917: Page. Continuance- and increase of excess-profits duty 81 Increase of rate of excess mineral rights duty 82 Deficiencies and losses of shippina; concerns 83 Relief in respect of Colonial exeats -profits duty 83 Munitions exchequer payments 84 Reference to referees 85 Amendments relating to deductions, etc 85 Apportionrrrent of accounting periods and years 87 Finance bill, 1918: Continuation of excess-profits duty 87 Profits arising from sale of trading stock 87 Regulations by Commissioners of Inland Revenue 89 ileraoranda by the Board of Inland Revenue 90 Valuation of stocks 90 Wear and tear and special depreciation and obsolescence al- '91 lowances Form of retui-n 93 Canada— Business Profits War Tax Acts, 1916-1918 94 Tax imposed 94 Deduction of other war taxes 95 Accounting period 95 Trades and businesses included 95 Computation of profits 96 Remuneration of directors 96 Capital 97 Of companies. 97 Paid up capital. 97 Reserve 97 New issues 97 Of persons other than companies 98 Collection of tax 98 Assessment appeals 100 Forms 102 France— Excess-profits tax laws, 1916-1917 105 Part I of law of July 1, 1916 105 Amendment in budget law of Dec. 30, 1916 112 Amendment in budget law of Dec. 31, 1917 112 Luxury tax: Sections 27-28 of the law of Dec. 31, 1917, as amended Apr. 5, 1918. . 117 Law of Mar. 22, 1918. 118 Schedules of luxuries 119 Administrative regulations 121 Great Britain — Clauses 11-13 of the Finance bill, 1918 123 Order of the House of Commons, Apr. 30, 1918 125 Consideration in Committee of the Whole, June 3, 1918; clauses nega- tived 126 INCOME TAX GREAT BRITAIN.' SYNOPSIS OF INCOME-TAX ACTS, INCLUDING BUDGET PROPOSALS OF 1918.2 I. Kates of Tax. Normal tax.—^ix shillings in the pound sterling (30 per cent) . [For taxes on incomes under £2,500 ($12,500), see below, Exemption, abatement, and relief.] Supertax. — Incomes over £2,500 ($12,500) are subject to a super- tax according to the following graduated scale: • tne. Rate. Portion of inco In the pound. Per cent. On the first £3,000: First£2,000 First SIO 000 s. d. 1 1 6 2 2 6 3 3 6 4 4 6 Next £500 Next S2 500 (SIO 000-12 500^ 5 Next £500 Next 12,500 ($12,500-15 000) On the toiirth £1,000 (£3,000 to £■1,000) Next S5 000 ($15 000 20 000) 10 On the fifth £1,000 (£4,000 to £5.000) Next $5 000 (820 000-25 0001 12^ On the sixth £1.000 (£5,000 to £6,000) Next ."[5,000 (S26,000-3n'000) \< On the next £2,000 (£6,000 to £8,000) Next $10 000 '(430 000-40 000) 11 h On the next £2,000 (£8,000 to £10,000) . Next SIO 000 (S40'00C^50 000) 20 On the remainder (above £ 10,000) Next $10,000 (above $50,000) ... 22.V II. Exemption, Abatement, and Relief. Exemption. — Incomes not exceeding £130 (about $650) are exempt. REDUCTION OF AMOUNT TO BE TAXED. Ahatement. — In the case of incomes over £130 and not exceeding £700 ($650 to $3,500) a deduction known as an "abatement" is made before the income-tax rate is applied. This abatement is graduated as follows : Income. Abatement. Exceeding £130 ($650) and not exceeding £400 ($2,000). . Exceeding £400 ($2,000) and not exceeding £600 ($3,000) Exceeding £600 ($3,000) and not exceeding £700 ($3,500) £120 (8600) 100 ( 500) 70 ( 350) In the case of incomes exceeding £700 ($3,500) no abatement is made, and the tax is levied on the whole income at the rate apphca- ble thereto. 1 For the sake of simplicity, $5 has been talcen as the approximate equivalent of £lin converting pounds sterling into dollars. ? Amendments to the Finance bill, 1918, made by the House of Commons in Committee of the Whole, June 3, and on report, June 13, have been incorporated, so that this synopsis represents the income ta.x" provisions applicable to the current fiscal year. 9 10 WAE TAXATION OF INCOMES. Relief in respect of wife, children, and dependent relatives. — If his total income does not exceed £800 (14,000), the taxpayer is entitled to reUef from tax upon £25 (1125) in respect of (i) a wife hvmg with him, or, in the case of a widower, any female relative, either of him- self or of his deceased wife, who takes care of his children,^ (ii) each child under 16 (including stepchildren and adopted children), and (iii) each dependent relative (incapacitated by old age or infirmity and whose income does not exceed £25 a year) whom he maintains.^ On incomes from £800 to £1,000 ($4,000 to $5,000) relief from tax upon £25 is granted in respect of each child under 16 above the number of two.^ Relief in respect of life-insurance premiums, etc. — Kelief from the normal tax is granted to the taxpayer on the amount of annual premiums for life insurance or deferred annuity on his own life or the life of his wife, but this allowance shall not reduce the income as estimated for purposes of exemption or abatement, neither shall it exceed one-sixth of the total income or 7 per cent of the capital sum insured or £100 ($500) in all. War-insurance premiums are not taken into account in calculating these limits. REDUCTION OF RATE OF TAX. Earned income relief. — Where the income does not exceed £2,500 ($12,500) and any part of that income is earned income, the following graduated rates instead of the normal tax are apphcable to the earned income: . Where total earned and unearned income — Rate on earned income— In the pound. Per cent. Does not exceed £500 (S2,500) .* «. d. 2 3 3 3 9 4 6 6 3 Ill Exceeds £500 ($2,500') ana does not exceed £1,000 (S5,000) . 1.'S^ Exceeds £1,000 (35,000) and does not exceed £1,600 ($7 500) 18J Exceeds £1,500 ($7 500) and does not exceed £2 000 (SIO 000) 22J Exceeds £2,000 (110,000) and docs not exceed £2.500 ($12,600) 261 These rates are applied to the earned income after deducting from it the amount of income relieved of tax because of abatement on account of income not exceeding £700, or relief in respect of wife, children, or dependent relatives, or in respect of life insurance or deferred annuity premiums. "Earned income" is defined to mean — (i) Any income arising in respect of any remuneration from any office or , employment of profit held by the individual, or in respect of any pension, superannuation, or other allowance, deferred pay, or compensation for loss of office, given in respect of the past services of the individual or of the husband or parent of the individual in any office or employment of profit, whether the individual or husband or parent of the individual shall have contributed to such pension, superannuation, allowance, or deferred pay or not; and 1 Finance bill, 1918, as amended. GREAT BRITAIN. 11 (ii) Any income from any property wkich is attached to or forms part of the emoluments of any office or employment of profit held by the individual ; and (iii) Any income which is charged under Schedule B or Schedule D, or the rules prescribed by Schedule D, and is immediately derived by the individual from the carrying on or exercise by him of his trade, profession, or vocation, either as an individual or, in the case of a partnership, as a partner personally acting therein. Unearned income relief. — Where the income does not exceed £2,000 ($10,000), the following graduated rates, instead of the normal tax, are applicable to the unearned income : "Whore total earned and unearned income — Rate on un- earned income— In the pound. Per cent. Does not exceed £500 (12,500) . s. d. .3 3 9 4 ft 5 3 15 Exceeds £500 ($2,500) and does not exceed £1,000 (S5,000) 18^ Exceeds £1,000 (S5,000) and does not exceed £1,500 (S7,500) •>?i Exceeds £1,500 (?7,500) and does not exceed £2,000 (310 000) 26| SPECIAL WAR PROVISIONS. Reduced rates on -pay of soldiers, sailors, etc. — The service pay of any person in the army, navy, air service, or Red Cross (if stationed abroad) , is taxed as follows : Rate of tax — If the person's total income- Does not exceed £300 (Sl.SOO) Exceeds £300 ($1,500) but does not exceed £500 ($2 500) Exceeds £500 (S2 500) but doc* not exceed £1 000 ($5 OOO) . . . Exceeds £1,000 ($5,000) but does not exceed £1,500 ($7,500) . - Exceeds £1,500 ($7,500) but does not exceed £2,000 ($10,000) . Exceeds £2,000 ($10,000) but does not exceed £2,500 ($12,500) Exceeds £2,500 (-512,500) Abatement in case of soldiers, sailors, etc. — If the total iacome does not exceed £300 ($1,500), the prewar abatement of £160 ($800) is granted. Otherwise the new scale of allowances operates instead. Diminution of profits owing to war. — When such person is assessed as to profits under Schedule D and can prove a diminution of income due to the war, he may recover the tax paid as to the amount of such diminution. Other persons suffering similar diminution of in- come taxable under that schedule may recover only in so far as the profits for the year are proved to have been less than the average profits of the last three years. 12 WAR TAXATION OF INCOMES. III. Classification of Income. The properties, profits, and gains in this respect of which income tax is payable are classified under five schedules and the tax is im- posed for every 20 shilhngs, or pound sterling, of the annual value : Schedule A. — Property in all lands, tenements, hereditaments, and heritages in the United Kingdom. Schedule B. — Occupation of all such lands, tenements, heredita- ments, and heritages. Schedule C. — All profits arising from interest, annuities, dividends, and shares of annuities payable to any person, body politic or cor- porate, company, or society, whether corporate or not, out of any public revenue. Schedule D. — The annual profits or gains arising or accruing to any person residing in the United Kingdom from any kind of property whatever, whether situate in the tmited Kingdom or elsewhere, and the annual profits or gains arising or accruing to any person residing in the United Kingdom from any profession, trade, employment, or vocation, whether the same shall be respectively carried out in the United Kmgdom or elsewhere. And the annual profits or gains arising or accruing to any person whatever, and whether a subject of His Majesty or not, although not resident within the United Kingdom, from any profit whatever in the United Kingdom, or any profession, trade, employment, or vocation exercised within the United Kingdom. And aU interest of money, annuities, and other annual profits and gains not charged by virtue of any of the other schedules. Schedule E. — Every public office or employment of profit, and upon every annuity, pension, or stipend payable by His Majesty, or out of the public revenues of the United Kingdom, except annuities charged to the duties under Schedule C. IV. Application of the Schedules. The following summary shows briefly the persons affected by the various schedules, how the tax is levied under such schedule, and the principal features of the elaborate system of rules for estimating the tax payable in respect of the several kinds of property: schedule a. [Landlord's property tax.] The tax under this schedule affects all persons receiving rent or other annual payments or incomes from lands or houses. It is, with certain exceptions, levied on the occupier, and if he is a tenant he has the right of deducting any tax paid by him or a proportionate part thereof from his next payment of rent, thus throwing the burden of the tax on the landlord. Charge is made on the landlord directly in the case of houses renting for less than £10 a year, properties let for less than a year, and apartment or tenement houses. He may be charged directly in other cases if he files a written request to that effect before a specified date. The annual value of lands, buildings, etc., capable of actual occupation on which tax is imposed is the amount of the rent by the year for which they are or could be let. GREAT BRITAIN. 13 Exemption maj^ be granted in respect of public buildings and offices of universities and colleges, hospitals, almhouses, public schools, and literary and scientific institutions, and allowance made for amount expended on repairs of such buildings. In the case of quarries, mmes, iron woi-ks, gas works, salt or alum works-, water works, canals and inland waterways, railways, toll roads, bridges, docks, ferries, etc., under this schedule, the tax is charged on the person or body of persons carrying on the concern and deducted from profits before they are distributed. The annual value on which the tax is imposed is diefuied to be the profits of the preceding year, except that in the case of coal or metalliferous mines an average of the five preceding years is taken. SCHEDULE B. [Farmer's tax.] This is a tax on the occupation of those kinds of land of which the ownership is taxed under Schedule A. It affects principally the in- come of farmers, and since few farmers keep an accurate account of their profits, the annual taxable value is defined bylaw: formerly, by the law of 1896, as one-third the amount of the rent, and, by the law of 1915, as the full amount of the rent; for the future, according to the Finance bill of 1918, as double the amount of the rent.^ Such rent does not include the rental of warehouses or buildings occupied for the carrying on of a trade or profession, nor of dwelling houses when these are rented with the farm for the purpose of farming. The occupant has, however, if he is a farmer or a manager of wood- lands on a commercial basis, the option of having his actual annual profits, computed according to the provisions of Schedule D, taken as the basis of the tax. In order to exercise this right, he must give written notice within a fixed time. When an occupant engaged in farming only has incurred a loss, he is entitled, on giving notice within six months after the year of assessment, , to recover so much of the tax as corresponds to the amount of the loss. Losses by flood or tempest because of which the tenant has received an abatement of rent from the landlord, or similar losses in the case of occupant o-woiers, permit of a correspond- ing reduction of the amount of the tax. The occupant, if a farmer, may pay the tax in two semiannual installments. Note. — Where the land is occupied by the owner he is chargeable under both Schedule A and Schedule B. SCHEDULE C. [Tax on holders of British or foreign government securities.] This includes all income, whether in the form of interest, annuities, dividends, or shares of annuities, arising out of any public revenue, British, colonial, or foreign. The amount of the tax is assessed at its source, before the taxable income reaches the taxpayer, upon the persons and corporations entrusted with the payment of such income. In this class are included all bankers or persons acting as bankers, who sell coupons for bills of exchange ; all persons who by means of ' In the committee stage of the bill, Jmie 3, 1918, an amendment was adopted providing that lands not occupied for the purposes of husbandry only, or mainly for those purposes (e. g., recreation grounds, open spaces, etc.), should be assessed under this schedule on their annual \alue instead of on double the aimual value. (106 H. C. deb. 1293.) 14 WAB TAXATION OF INCOMES. coupons obtain payments elsewhere than, m the United Kingdom; dealers in coupons buying coupons for dividends otherwise than from a banker or other dealer. Half-yearly payments of less than 50s. are exempt from the tax. Exemptions are also under certain circumstances granted, upon written request, to trade unions, friendly societies, sayings banks, the Crown, ministers representing foreign nations, charitable trusts, trusts for keeping churches in repair. Exempt from the tax under this schedule are the interest on the securities which represent subscriptions by any bank to any Govern- ment war loan; and the interest on securities issued under the war loan acts, 1914 to 1917, when the Treasury so directs. In the former case the interest is taxed under Schedule D, case 1, in the latter under Schedule D, case 3. Taxable are dividends, etc., where the title is proved by any book or list ordinarily kept in the United Kingdom, except that no non- resident may be taxed on foreign or colonial securities. No banker or other person may be compelled, under this schedule, to disclose the private affairs of any one on whose behalf he may be acting. SCHEDULE D. [Tax on busineaa profits, professional incomes, and on sources of income not included under any other schedule.] Case 1. Businesses, manufacturers, and concerns in the nature of a business, not contained in any other schedule. — This case covers all resident persons or corporate bodies as to all enterprises carried on by them, whether at home or abroad, except such as fall under Schedule A. Profits are computed without deduction for ordinary debts; for sums recoverable under an insurance or contract of indemnity; for what the capital employed in the business might have brought if put out at interest; for capital withdrawn from the business. On the other hand, deduction is allowed for debts proved to be bad debts; for repairs of premises; for supply, repairs or alteration of imple- ments not exceeding the average amount so paid out during the pre- ceding three years;, for replacing machinery or plant (this deduction, however, to be diminished by the sum oi any previous deductions on the same account together with amounts realized by the sale of the old machinery or plant) ; and, in the discretion of the tax com- missioners, for not more than two-thirds the amount of the rental of the place of business, etc., provided that the premises are in the United Kingdom. When a person carries on two or more enterprises and one or more of them results in a loss, such losses may be set off against the profits of the other enterprises. Chargeable under this case are interest on securities representing a bank's subscription to the war loan; and income from investment of domestic life-insurance funds. Case 2. Professions, employments, and vocations not contained in any other schedule. Provisions applicable both to Oases 1 and 2. — The basis of assessment under both these cases is the average income for the three trade years preceding the assessment, except that weekly wage earners employed at manual labor are assessed for the quarter instead of for the year. GKEAT BKITAIN. 15 No deductions are allowed for money not exclusively spent in pursuance of the business or profession; for the maintenance of the taxpayer, his family, or his establishment; for the rental of any por- tion of office or dwelling house not used for the purpose of the business or profession; for the rental of a place of business outside the United Kingdom. On the other hand, deduction is allowable for payment of excess profits duty and munitions exchequer payments and for depreciation, provided, in the latter case, that it may not, when added to sums allowed for depreciation during any previous year, exceed the total value of the plant or machinery. Profits from lands are not included under either of these cases. The profits of a partnership are considered as a unit, and are con- sidered independently of any other business or profession in which any of the partners is engaged. (This is the only exception to the princi- ple that each person is charged upon the aggregate of all those of his enterprises which come under Schedule D.) A change in the per- sonnel of a partnership does not affect the assessment, unless it can be proved that the change resulted in or was followed by a diminu- tion of the profits. Case 3. Income of an uncertain annual value not charged under Schedule A. — Under this case are chargeable income from all, securi- ties bearing interest payable out of the public reveniue and not charged under Schedule C; income from all discounts and aU interest not annual; interest from such war loans as are issued with the pro- vision that they be not subject to deduction of the income tax (at the source); investment income of foreign and colonial insurance companies; profits of dealers in cattle or milk beyond such as are computed under Schedule B, when the land occupied by the dealers is not sufficient for the keep of the cattle and the rental of such land is found to be an insufficient indication of the profits. The minimum taxable income under this case is that arising from the same source during the preceding year. Case 4. Income from foreign and colonial securities. — Exempt from taxation under this case is interest taxable under Schedule C, and, in the case of a taxpayer not permanently a resident of the United Kingdom, such interest as is not actually received by him there during the assessment year. Residents, on the other hand, are liable for interest even when it is not received by them in the United Kingdom. The income received from the same source during the preceding year is taken as the basis of assessment, and deduction is allowed when such income is subject to the payment of annual interest or annuity to a nonresident. Neither in this case nor in case 5, however, is deduction allowed for expenses of distribution. Case 5. Income from foreign and colonial possessions.— Ta,x&ble under this case are, in the case of a resident, the income from stocks, shares, or rents, whether or not received in the United Kingdom; in the case of a nonresident, the income from stocks, shares, or rents only in so far as it is received in the United Kingdom; in the case of either, income from other property, only in so far as received in the United Kingdom. The assessment is on the basis of the average of the three preceding trade years. 16 WAR TAXATION OP INCOMES. Case 6. Anniial income not falling under any other case or schedule. — To be computed upon full information given to the authorities, on whatever time basis they find proper. Provisions applicahle to all cases under Schedule D. — If a business or professional firm, etc., ceases altogether, through death, bank- ruptcy, or for any other cause, an amendment of the assessment may be applied for within a fixed time after the assessment year. If the owner or incumbent is succeeded by another person, the assessment continues to hold good, unless cause to the contrary be shown. If such succession occurs during an assessment year, the portion which each party is to pay is determined by the tax officials, who are authorized to make the necessary refunds. In the case of interests, aimuities, and other annual payments made out of the income from lands, heritages, offices, or employments, annuities, pensions, stipends or shares of public annuities, the tax is correspondingly reduced. In the case of annual payments made out of other sources of income, the reduction is at the discretion of the tax authorities. Income is held to arise in the United Kingdom and to be taxable under this act when its source is a business, profession, etc., which is either carried on there, or which has its center of management there, wherever carried on. Where control of a business is situated abroad, such business shall be held to be foreign and so assessed on its oper- ations within the United Kingdom, even though some of its partners are residents. The incomes of charitable trusts, of certain friendly societies, and of certain trade unions are exempt from taxation under this schedule. SCHEDULE E. [Tax on the salaries of public officials and employees. 1 Taxable under this section, in addition to all civil and military ofii- cials and employees of the Crown, are offices or ,employments under any ecclesiastical body, under any public institution or foundation of whatever nature, under any public corporation or local authority, and under any trustees of public funds, tolls, or duties ; as well as all other public offices and all other employments of a public nature. Taxable under this schedule, also, as a result of a somewhat strained interpretation embodied in the Companies Act of the phrase in the original act of 1842, "offices or employments of profit under any company or society, whether corporate or noncorporate," are the officials of limited-liability companies. This has occasioned con- siderable difficulty, since the basis of assessment under this schedule is the annual salary, rather than the average salary, as under Sched- ule D. The income taxable under this schedule is not merely that received in payment of current services, but also all annuities, pensions, stipends, including voluntary grants, and even Easter offerings made to clergymen by their congregations. Allowances are, however, made in certain cases for expenses connected with the office or employment. Wage earners employed at manual labor do not come under this schedule. And certain classes of persons who come under the sched- ule if publicly employed, are held not to come under it if employed by limited-liability companies. Such is the case with subordinate GREAT BRITAIN. 17 employees, and with persons whose head office is in the United King- dom but who are employed abroad. List of Income-Tax Acts in Force . 1842. Income-tax act, 1842 (5 and 6 Vict., c. 35), sees. 3-24, 28—36, 38-81, 83-86, 88-89, 93-108, 105-106, 110-142, 146-147, 149-151, 153-156, 158-174, 176-180, 182-191. Land-tax act, 1842 (5 and 6 Vict., c. 37), sees. 3-5. Income-tax (foreign dividends) act, 1842 (5 and 6 Vict., c. 80), sec. 2. 1853. Income-tax act, 1853 (16 and 17 Vict., c. 34), sees. 2-26, 29-32, 34-41, 43, 47-56, 58. Income-tax (insurance) act, 1853 (16 and 17 Vict., c. 91), sec. 1. 1854. Income-tax act, 1854 (17 and 18 Vict., c. 24), sec. 5. 1855. Income-tax (insurance) act, 1855 (18 and 19 Vict., c. 35), sec. 1. . 1856. Taxes act, 1856 (19 and 20 Vict., c. 80), sec. 1. 1859. Income-tax act, 1859 (22 and 23 Vict., c. 18), sec. 6. 1860. Income-tax act, 1860 (23 and 24 Vict., c. 14), sees. 4-7, 10. 1861. Revenue (No. 2) act, 1861 (24 and 25 Vict., c. 91), sec. 36. 1863. Revenue act, 1863 (26 and 27 Vict., c. 33), sec. 22. 1864. Revenue (No. 1) act, 1864 (27 and 28 Vict., c. 18), sec. 15. 1865. Revenue act, 1865 (28 and 29 Vict., c. 30), sec. 6. 1866. Revenue act, 1866 (29 and 30 Vict., c. 36), sees. 8-9. 1868. Revenufi act, 1868 (31 an^ 32 Vict., c. 28), sec. 5. 1872. Income-tax (public offices) act, 1872 (35 and 36 Vict., c. 82), sec. 1 (1). 1878. Customs and inland revenue act, 1878 (41 and 42 Vict., c. 15), sees. 12, 16. 1879. Customs and inland revenue act, 1879 (42 and 43 Vict., c. 21), sec. 18. 1880. Taxes management act, 1880 (43 and 44 Vict., c. 19), sees. 5, 8 (2), 10, 13, 15-19, 20(7-8), 21-24, 26-37, 39-46, 48-61 (1), 62-70, 72-79, 81-97, 101-103, 105-106, 108-113, 115, 116 (1), 117-121, schedule 2. 1881. Customs and inland revenue act, 1881 (44 and 45 Vict., c. 12), sec. 23. 1883. Revenue act, 1883 (46 and 47 Vict., c. 55), sec. 12. 1884. Revenue act, 1884 (47 and 48 Vict., c. 62), sees. 6-7. 1885. Customs and inland revenue act, 1885 (48 and 49 Vict., c. 51), sees. 25-26. 1887. Customs and inland revenue act, 1887 f50 and 51 Vict., c. 15), sec. 18. 1888. Customs and inland revenue act, 1888 (51 and 52 Vict., c. 8), sec. 24. 1889. Revenue act, 1889 (52 and 53 Vict., c. 42), sees. 10, 12-14. 1890. Customs and inland revenue act, 1890 (53 and 54 Vict., c. 8), sees. 23-24, 27-28, 30. Inland revenue regulation act, 1890 (53 and 54 Vict., c. 21), sees. 1, 4 (l)-(3), 8, 11, 21 (1), 22, 29 (2), 33 (2), 35-36, 1891. Taxes (regrulation of remuneration) act, 1891 (54 and 55 Vict., c. 13), sees. 1-6. 1892. Taxes (regulation of remuneration) amendment act, 1892 (55 and 56 Vict., c. 25), sec. 1 (2). 1893. Trades-union (provident funds) act, 1893 (56 and 57 Vict., c. 2), sees. 1-3. Customs and inland revenue act, 1893 (56 and 57 Vict., c. 7), sec. 7. Industrial and provident societies act, 1893 (56 and 57 Vict., c. 39), sec. 24. 1894. Finance act, 1894 (57 and 58 Vict., c. 30), sees, 34 (1), 35,36. 1896. Finance act, 1896 (59 and 60 Vict., c. 28), sees. 26-28, 30. 1897. Finance act, 1897 (60 and 61 Vict., c. 24), sec. 5. 1898. Finance act, 1898 (61 and 62 Vict., c. 10), sees. 8-10, 16. 1903. Revenue act, 1903 (3 Edw. 7, c. 46), sees. 10, 12, 13. 1904. Finance act, 1904 (4 Edw. 7, c. 7), sees. 8-9. 1906. Revenue act, 1906 (6 Edw. 7, c. 20), sec. 11. 1907. Finance act, 1907 (7 Edw. 7, c. 13), sees. 19-23, 24 (2)-28. 1908. Finance act, 1908 (8 Edw. 7, c. 16), see. 8. ■ 1910. Finance (1909-10) act, 1910 (10 Edw. 7, c. 8), sees. 66,68-72, 93,94. 1911. Revenue act, 1911 (1 Geo. 5, c. 2), sees. 12-14. 1912. Finance act, 1912 (2 and 3 Geo. 5, c. 8), sees. 6-7. 1913. Finance act, 1913 (3 and 4 Geo. 5, c. 30), sec. 3. 1914. Finance act, 1914 (4 and 5 Geo. 5, c. 10), sees. 4r-5, 7-9 (3), 10, 11. Finance act, 1914 (session 2) (5 Geo. 5, c. 7), sec. 13. 1915. Finance act, 1915 (5 and 6 Geo. 5, c. 62), sees. 11-23,28 (1). Finance (No. 2) act, 1915 (5 and 6 Geo. 5, c. 89), sees. 21-22,24,26-36,47,50. War loan (supplemental provisions) act, 1915 (5 and 6 Geo. 5, c. 93), sec. 3. 1916. Finance act, 1916 (6 and 7 Geo. 5, c. 24), sees. 25-33, 35^0, 42-44, 48 (2), 53, 57, 63, 64. 1917. Finance act, 1917 (7 and 8 Geo. 5, c. 31), sees. 11-19. 68422—18 2 18 WAE, TAXATION OF INCOMES. 1918. Income-tax bill [H. L.] (1) introduced in the House of Lords February 19, 1918, to consolidate the laws in force August, 1917. , tt en Finance bill, 1918 [Bill 24], clauses 19-33, 39, introduced m the House o± Oom- mons May 1, 1918; amendments to clauses 23, 26, 28, adopted m committee of the whole June 3 (106 H. C. Deb. 1293, 1346), and on -report June 13. Note.— The House of Lords bill, 1918 (1), to consolidate the enactments relating to income tax, is the most convenient text of the law in force m systematic order. I- or ready reference on a particular topic the most useful manuals are W. b. bneliing s "Income-tax and supertax law and cases," third edition, and "Income-tax and super- tax practice," second edition (London, Sir Isaac Pitman & Sons, 1918), in which the statute and case law and its application to current business practice, respectively, are arranged under subject-headings, in alphabetical order. The author of these works is an official of the Inland Revenue Department, experienced in the administration of the income-tax acts. Table Showing Amount of Tax Payable on Certain Incomes and Effective Rate Chaegbd under the Budget Proposals of 1918. (a) Inco'me tax. In- Wholly earned. ■Wholly unearned. Income. ■Wholly earned. ■Wholly unearned. Amount Efflective Amount Effective Amount Etfective Amount Effective of tax. rate of tax. rate of tax. rate. of tax. rate. £ £ s. d. s. rf £ s. d. s. rf Per cent. Fer cent. 131. 1 2 1 2 S655 S5.00 .76 S5.00 .76 150. 3 7 6 5 4 10 / 750 16.87 2.24 22.50 3 200. 9 11 12 1 2 1,000 45.00 4.5 00.00 6 260. 14 12 6 2 19 10 1 7 1,250 73.12 5.86 97.50 7.8 300. 20 5 4 27 1 1(1 1,600 101.25 6.76 135.00 9 350. 25 17 6 6 34 10 2 n 1,750 129.37 7.39 172. .50 9.86 400. 31 10 7 42 2 1 2,000 157.60 7.87 210.00 10.5 460. 39 7 6 9 52 10 2 4 2,250 196.87 8.75 262.60 11.67 500. ■45 10 60 2 5 2,500 225.00 9 .300.00 12 660. 67 10 2 84 7 6 3 1 2,760 337.50 12.27 421.87 15.34 600. 75 2 6 93 15 3 1 3,000 .375.00 12.6 468.75 15.62 650. 87 2 X lOS 15 3 4 3,260 435.00 13.38 643.76 16.73 700. 94 10 2 X 118 2 6 3 4 3,600 472. 50 13.5 590.62 16.87 800. 120 3 150 3 9 4,000 600.00 15 760.00 18.75 900. 135 3 168 16 3 9 4,500 675.00 15 843.76 18.76 1,000. 160 3 187 10 3 9 5,000 750.00 15 937.50 18.75 1,600. 281 5 3 » 337 10 4 6 7,500 1,406.26 18.73 1,687.60 22.6 2,000. 450 4 6 525 5 3 10,000 2,260.00 22.6 2,625.00 26.25 2,500. 656 6 6 3 750 6 12,500 3,281.25 26.26 3, 750 00. 30 (6) Income tax and supertax. In- come. Income tax. Supertax. Total tax. Effective rate. Income. Income tax. Super- tax. Total tax. Effec- tive rate £ £ £ n. £ a. s. d. Perct. 2,750 825 43 15 868 16 6 4 513,750 S4,125 $218.75 $4,343.75 31.59 3,000 900 62 10 962 10 6 5 15,000 4,50C 312. 5C 4,812.50 32.08 4,000 1,200 162 10 1,362 10 6 10 20, 000 6, OOC 812.50 6,812.50 34.16 5,000 1,500 287 1(1 1,787 10 7 2 25,000 7,50C 1,437.5C 8,937.50 35.75 6,000 1,800 437 10 2,237 10 . 7 5 30,000 9, OOC 2,187.5C 11,187.50 37.29 7,000 2,100 612 10 2,712 10 7 9 36,000 10,50C 3,062.5C 13,562.50 38.75 8,000 2,400 787 10 3,187 10 8 40,000 12, OOC 3,937.5C 15,937.50 39.84 9,000 2,700 987 10 3,687 10 8 2 45,000 13,500 4,937.5C 18, 437. 50 40.97 10,000 3,000 1,187 10 4,187 10 8 4 50,000 16,000 5, 937. 6C 20, 937. 50 41.87 11,000 3,300 1,412 10 4,712 10 8 7 55,000 16, 500 7,062.50 23, 562. 50 42.84 12,000 3,600 1,637 10 6,237 10 8 9 60,000 18,000 8,187.50 26,187.50 43.65 13,000 3,900 1,862 10 6,762 10 8 10 65,000 19,600 9, 312. 50 28,812.60 44.33 14,000 4,200 2,087 10 6,287 10 9 70,000 21,000 10,437.50 31,437.60 44.91 15,000 4,600 2,312 10 6,812 10 9 1 75,00C 22, 500 11,562.50 34, 062. 50 45.42 20,000 6,000 3,437 10 9,437 10 9 6 100, OOC 30, OOC 17,187.50 47,187.50 47.18 25,000 7,600 4,662 lU 12,062 10 9 S 125, OOC 37, 50C 22,812.50 60, 312. 50 48.25 30, 000 9,000 6,687 lU 14,687 10 9 9 150, OOC 45, OOC 28,437.50 73,437.50 48.96 40,000 12,000 7,937 10 19,937 10 10 200, OOC 60, OOC 39,687.50 99, 687. 6C 49.84 SO, 000 15,000 10, 187 10 26,187 10 10 1 250, 000 75, OOC 50,937.60 125,937.50 50.37 100,000 30, 000 21,437 10 51,437 10 10 3 500,000 160, OOC 107,187.50;257;i87.5C 51.44 150,000 45,000 32,687 10 77,687 10 10 4 750,000 225, OOC 163, 437. 5C 388, 437. 6( 51.79 200,000 60, 000 43,937 10 103,937 10 10 5 1,000,000 300,000 219,687.50 619,687.50 51.97 CANADA. INCOME WAR TAX ACT, 1917. [7 and 8 Geo. V, c. 28; as amended in 1918.] AN ACT TO AUTHORIZE THE LEVYING OF A WAR TAX UPON CERTAIN INCOMES. [Assented to 20th September, 1917.] His Majesty, by and with the advice and consent of the Senate and Hoiise of Commons of Canada, enacts as follows: 1. This act may be cited as the Income War Tax Act, 1917. DEFINITIONS. 2. In this act, and in any regulations made under this act, unless the context otherwise requires — (a) "Board" means a Board of Eeferees appointed under section 12 hereof. (&) "Minister" means the Minister of Finance. (c) "Normal tax" means the tax authorized by paragraph (a) of section 4 of this act. (d) "Person" means an}- individual or person and any syndicate, trust, association, or other body and any body corporate, and the heirs, executors, administrators, curators, and assigns, or other legal representatives of such person, according to the law of that part of Canada to which the context extends. (e) "Supertax" means the taxes authorized by paragraphs (b) to (m), both inclusive, of section 4 of this act. (/) "Taxpayer" means any person paying, liable to pay, or believed by the minister to be liable to pay, any tax imposed by this act. (g) "Year" means the calendar year. (h) "Surtax" means the taxes authorized by paragraphs (n) to (q), both inclusive, of section 4 of this act. (i) "Dependent child" means a child under 21 years of age and dependent on his parent for support, or over 21 years of age and dependent on his parent for support on account of physical or mental incapacity. INCOME. 3. (1) For the purposes of this act, "income" means the annual net profit or gain or gratuity, whether ascertained and capable of computation as being wages, salary, or other fixed amount, or unascertained as being fees or emoluments, or as being profits from a trade or commercial or financial or other business or calling, directly or indirectly received by a person from any office or employment, or 19 20 WAR TAXATION OF INCOMES. from any profession or calling, or from any trade, manufacture, or business, as the case may be; and shall include the interest, dividends, or profits directly or indirectly received from money at interest upon any security or without security, or from stocks, or from any other investment, and, whether such gains or profits are divided or dis- tributed or not, and also the annual profit or gain from any other source; including the income from but not the value of property ac- quired by gift, bequest, devise, or descent; and including the income from but not the proceeds of hfe insurance policies paid upon the death of the person insured, or payments made or credited to the insured on life insurance endowment or annuity contracts upon the matu- rity of tlie term mentioned in the contract or upon the surrender of the contract; with the following exemptions and deductions: EXEMPTIONS AND DEDUCTIONS. (a) Such reasonable allowance as may be allowed by the minister for depreciation, or for any expenditure of a capital nature for renewals, or for the development of a business, and the minister, when determining the income derived from mining and from oil and gas wells, shall make an allowance for the exhaustion of the mines and wells. (h) S200 for each child under 16 years of age who is dependent upon the taxpayer for support. (c) Amounts paid by the taxpayer during the year to the Patriotic and Canadian Red Cross funds, and other patriotic and war funds approved by the minister. (d) For the purposes of the normal tax, the income embraced in a personal return shall be credited with the amount received as divi- dends upon the stock of any company or other person which is taxable upon its income under this act: Provided, Tiowever, That in determining the income the personal and living expenses shall not be taken into consideration. HOLDING COMPANIES. (2) Where an incorporated company conducts its business, whether under agreement or otherwise, in such manner as either directly or indirectly to benefit its shareholders or anj' of them, or any persons directly or indirectly interested in such company, by selling its product or the goods and commodities in which it deals at less than the fair price which might be obtained therefor, the minister may, for the purposes of this act, determine the amount which shall be deemed to be the income of such company for the year, and in determining such amount the minister shall have regard to the fair price which, but for any agreement, arrangement, or understanding, might be or could have been obtained for such product, goods, and commodities. NONRESIDENTS. (3) In the case of the income of persons residing or having their head office or principal place of business outside of Canada but carrying on business in Canada, either directly or tlu-ough or in the name of any other person, the income shall be the net profit or gain arising from the business of such person in Canada. CANADA. 21 UNDISTRIBUTED GAINS. (4) For the purpose of the supertax only, the income of a tax- payer shall include the share to which he would be entitled of the undivided or undistributed gains and profits made by any syndicate, trust, association, corporation, or other body, or any partnership, if such gains and profits were divided or distributed, unless the minister is of opinion that the accumulation of such undivided and undis- tributed gains and profits is not made for the purpose of evading the tax, and is not in excess of what is reasonably required for the purposes of the business. INCOME TAX. 4. (1) There shall be assessed, levied and paid upon the income during the preceding year of every person residing or ordinarily resident in Canada or carrying on any business in Canada, and upon the income received by any person from any source within Canada, the following taxes : (a) Two per centum upon all income exceeding $1,000 but not exceeding $1,500, in the case of unmarried persons and widows or widowers without dependent children, and exceeding $2,000 but not exceeding $3,000, in the case of all other persons; 4 per centum upon all income exceeding $1,500, in the case of unmarried persons and widows or widowers without dependent children, and exceeding $3,000 in the case of all other persons. SUPERTAX. And in addition thereto the following supertax: (b) Two per centum upon the amount by which the income exceeds $6,000 and does not exceed $10,000. (c) Five per centum upon the amount by which the income exceeds $10,000 and does not exceed $20,000. (d) Eight per centum of the amount by which the income exceeds $20,000 and does not exceed $30,000. (e) Ten per centum of the amount by which the income exceeds $30,000 and does not exceed $50,000. (/) Fifteen per centum of the amount by which the income exceeds 150,000 and does not exceed $75,000. (l7) Twenty per centum of the amount by which the income ex- ceeds $75,000 and does not exceed $100,000. Qi) Twenty-five per centum of the amount by which the income exceeds $100,000 and does not exceed $200,000. (i) Thirty per centum of the amount by which the income exceeds $200,000 and does not exceed $400,000. ij) Thirty-five per centum of the amount by which the income ex- ceeds $400,000 and does not exceed $600,000." (!c) Forty per centum of the amount by which the income exceeds $600,000 and does not exceed $800,000. (Z) Forty-five per centum of the amount by which the income ex- ceeds $800,000 and does not exceed $1,000,000. (m) Fifty per centum of the amount bv which the income exceeds $1,000,000. 22 WAB TAXATIOSr OF INCOMES. SURTAX. And in addition thereto the following surtax : (n) Upon income in excess of $6,000 but not exceeding S10,000, 5 per cent of the normal tax and supertax payable thereon. (o) Upon income in excess of $10,000 but not exceeding $100,000, 10 per cent of the normal tax and supertax payable thereon. (p) Upon income exceeding $100,000 but not exceeding $200,000, 15 per cent of the normal tax and supertax payable thereon. (q) Upon income exceeding $200,000, 3.5 per cent of the normal tax and supertax payable thereon. CORPORATIOX INCOME TAX. (2) Corporations and joint-stock companies, no matter how created or organized, shall pay 6 per cent upon income exceeding .$3,000, but shall not be liable to pay the supertax or surtax; and the minister may permit any corporation or joint-stock company the fiscal year of which is not the calendar year, to make a return and to have the tax payable by it computed upon its income for the 12 months ending with its last fiscal year preceding the date of assessment. PARTNERSHIPS NOT LIABLE TO TAX. (3) Any persons carrying on business in partnership shall be liable for the income tax only in their individual capacity. TRANSFER OF PROPERTY TO EVADE TAXATION. (4) A person who, after the 1st day of August, 1917, has reduced his income by the transfer or assignment of any real or personal movable or immovable propertj', to such person's wife or husband, as the case may be, or to any member of the family of such person, shall, nevertheless, be liable to be taxed as if such transfer or assign- ment had not been made, unless the minister is satisfied that such transfer or assignment was not made for the purpose of evading the taxes imposed under this act or any part thereof. DEDUCTIONS ALLOWED WAR TAXES. (5) Taxpayers shall be entitled to the following deductions from the amounts that would otherwise be payable by them for income tax — (a) From the income tax accruing for the year 1917 the amounts paid by any taxpayer for taxes accruing during the year 1917 under the pi'ovisions of Part I of the Special War Revenue Act, 1915, and from the income tax payable for any year thereafter the amounts paid by the taxpayer for taxes accruing during such year under the said Part I of the said act. (b) From the income tax accruing for the year 1917 the amounts paid by any taxpayer under the Business Profits War Tax Act, 1916, and any amendments thereto for any accounting period ending in the year 1917. In the case of a partnership each partner shall be CANADA. 23 entitled to deduct such portion of the tax paid by the partnership under the Business Profits War Tax Act, 1916, as may correspond to his interest in the income of the partnership. INCOMES NOT LIABLE TO TAX. 5. The following incomes shall not be liable to taxation hereunder — (a) The income of the Governor General of Canada. (b) The incomes of consuls and consuls general who are citizens of the country they represent and who are not engaged in any other business or profession. (c) The income of any company, commission, or association not less than 90 per cent of the stock or capital of which is owned by a Province or a municipality. (d) The income of any religious, charitable, agricultural, and edu- cational institutions, boards of trade, and chambers of commerce. (e) The incomes of labor organizations and societies and of benevo- lent and fraternal beneficiary societies and orders. (/) The incomes of mutual corporations not having a capital represented by shares, no part of the income of which inures to the profit of any member thereof, and of life insurance companies except such amount as is credited to shareholders' account. ig) The incomes of clubs, societies, and associations organized and operated solely for social welfare, civic improvement, pleasure, recreation, or other nonprofitable purposes, no part of the income of which inures to the benefit of any stockholder or member. (Ji) The incomes of such insurance, mortgage, and loan associations operated entirely for the benefit of farmers as are approved by the mtaister. (i) The income derived from any bonds or other securities of the Dominion of Canada issued exempt from any income tax imposed in pursuance of any legislation enacted by the Parliament of Canada. (j) The military and naval pay of persons who have been on active service overseas during the present war in any of the military or naval forces of His Majesty or any of His Majesty's allies. Qc) The income of incorporated companies whose business and assets are carried on and situate entirely outside of Canada. 6. [Repealed.] ANNUAL RETURN OF TOTAL INCOME. 7. (1) Every person liable to taxation under this act shall, on or before the 28th day of February in each year, without any notice or demand, deliver to the minister a return, in such form as the minister may prescribe, of his total income during the last preceding calendar year. In such return the taxpayer shall state an address in Canada to which all notices and other documents to be maUed or served under this act may be mailed or sent. RETURNS OF CORPORATIONS, ETC. (2) The return in the case of a corporation, association, or other body shall be made and signed by the president, secretary, treasurer, or chief agent having a personal knowledge of the affairs of such 24 WAR TAXATION OF INCOMES. corporation, association, or other body, or, in any case, by such other person or persons employed in the business Uable or believed to be liable to taxation, as the minister may require. RETURN BY GUARDIAN, LEGAL REPRESENTATIVE, ETC. (3) If a person liable to taxation hereunder is unable for any reason to make the return required by this section, such return shall be made by the guardian, curator, tutor, or other legal representative of such person, or, if there is no such legal representative, by some one acting as agent for such person, and in the case of the estate of any deceased person, by the executor, administrator, or heir of such deceased person, and if there is no person to make a return under the provisions of this subsection, then such person as may be required by the minister to make such return. RETURNS BY EMPLOYERS OF SALARIES AND BY COMPANIES OF DIVIDENDS, ETC. (4) All employers shall make a return of all persons in their employ- receiving any salary or other remuneration, any portion of which is liable to taxation under this act, and all corporations, associations, and syndicates shall make a return of aU dividends and bonuses paid to shareholders and members and all persons in whatever capacity- acting, having the control, receipt, disposal, or payment of fixed or determinable annual or periodical gains, profits, or income of any taxpayer, shall make and render a separate and distinct return to the minister of such gains, profits, or income, containing the name and address of each taxpayer. Such returns shah be delivered to the minister on or before the 28th 4ay of February in each year, without any notice or demand being made therefor, and in such form as the minister may prescribe. (5) The minister may at any time enlarge the time for making any return. ADDITIONAL INFORMATION. 8. (1) If the minister, in order to enable him to make an assess- ment, desires further information, or if he suspects that any person who has not made a return is liable to taxation hereunder, he may, by registered letter, require additional information,, or a return con- taining such information as he deems necessary, to be furnished him within 30 days. PRODUCTION OF LETTERS, ACCOUNTS, ETC. (2) The minister may require the production, or the production on oath, by the taxpayer or oy his agent or officer, or by any person or partnership holding, or paying, or liable to pay, any portion of the income of any taxpayer, of any letters, accounts, invoices, state- ments, and other documents. CANADA. 25 INQUIRY AS TO INCOME. (3) Any officer authorized thereto by the minister may make such mquiry as he may deem necessary for ascertaining the income of any taxpayer, and for the purposes of such inciuiry such officer shall have all the powers and authority of a commissioner appointed under Part I of the Inquiries Act, Ee vised Statutes of Canada, 1906, chapter 104. PENALTY. 9. (1) For every default in complymg with the provisions of the two next preceding sections, the taxpayer, and also the person or persons required to make a return, shall each be liable on summary conviction to a penalty of .$100 for each day during which the default continues. (2) Any person making a false statement in any return or m any mformation required by the minister shall be liable on summary conviction to a penalty not exceeding $10,000 or to six months' im- prisonment, or to both fine and imprisonment. ASSESSMENT AND PAYMENT. 10. (1) The minister shall, on or before the 30th day of April in each year, or on or before such other date as he may in any case or cases prescribe, determine the several amounts payable for the tax, and shall thereupon send by registered mail a notice of assessment in such form as the minister may prescribe to each taxpayer, notifying him of the amount payable by him for the tax. The tax shall be paid within one month from the date of mailing of the notice of assessment. In default of payment, interest at the rate of 7 per cent per annum shall be paid on such tax mitil the said tax and interest are paid. (2) The minister shall not be bound by any return or information supplied by or on behalf of a taxpayer, and notwithstanding such re- turn or information, or if no return has been made, the minister may determine the amount of the tax to be paid by any_ person. (3) Any person liable to pay the tax shall continue to be liable, and in case any person so liable shall fail to make a return as re- quired by this act or shall make an incorrect or false return, and does not pay the tax in whole or in part, the minister may at any time assess such person for the tax, or such portion thereof as he may be liable to pay, and may prescribe the time within which any ap- peals may be made under the provisions of this act from the assess- ment or from the decision of the board and may fix the date of pay- ment of the tax. SECRECY. 11. No person employed in the service of His Majesty shall com- municate or allow to be communicated to any person not legally entitled thereto any information obtained under the provisions of this act, or allow any such person to inspect or have access to any written statement furnished under the provisions of this act. Any person violating any of the provisions of this section shall be liable on summary conviction to a penalty not exceeding $200. 26 WAE TAXATION. OP INCOMES. BOARD OF REFEREES. 12. (1) The governor in council may appoint a board or boards of referees, and may prescribe the territory or district within which a board shall exercise jurisdiction. A board shall consist of not more than three members, and the members of a board shall jointly and severally have all the powers and authority of a commissioner ap- pointed under Part I of the Inquiries Act, Revised Statutes of Canada, 1906, chapter 104. . ^ • (2) Every member of the board shall take an oath of office in Form I of the schedule to this act before performing any duty under this act. All affidavits made in pursuance of this subsection shall be filed with the minister. COITRT OP REVISION. 13. A board shall act as a court of revision, and shall hear and determine any appeal made by a taxpayer under this act in such place in Canada as the minister may direct. NOTICE OP APPEAL. ■ 14. Any person objecting to the amount at which be is assessed, or as having been wrongfully assessed, may, personally or by his agent, within 20 days after the date of mailing of the notice of assess- ment, as provided in section 10 of this act, give notice in writing to the minister in Form II of the schedule to this act that he consider himself aggrieved for either of the causes aforesaid; otherwise such person's right to appeal shall cease, and the assessment made shall stand and be valid and binding upon all parties concerned, notwith- standing any defect, error, or omission that may have been made therein, or in any proceeding required by this act or any regulation hereunder; provided, however, that the minister, either before or after the expiry of the said 20 days, may give a taxpayer further time in which to appeal. HEARING AND DECISION BY BOARD. 15. (1) A board, after hearing any evidence adduced, and upon such other inquiry as it considers advisable, shall determine the mat- ter and confirm or amend the assessment accordingly. A board may increase the assessment in any case before it. The board shall send a copy of its decision by registered mail to the taxpayer or his agent or officer. COSTS. (2) In any case where the appeal is unsuccessful, the board may direct that the person who appealed shall pay the costs or part of the costs of such appeal; and if such appeal is successful, a board may recommend that the costs or any part thereof be paid by the Crown. The tariif of fees shall be as prescribed by the board. PROCEEDING EX PARTE. 16. If the taxpayer fails to appear, either in person or by agent, the board may proceed ex parte or may defer the hearing. CANADA. 27 APPEAL TO EXCHEQUER COURT. 17. If the taxpayer is dissatisfied with the decision of a board, he may, within 20 days after the mailing of the decision, give a written notice to the minister in Form III of the schedule to this act that he desires to appeal from such decision. If the taxpayer gives such notice, or if the minister is dissatisfied with the decision, the minister shall refer the matter to the Exchequer Court of Canada for hearing "and determination, and such reference may be made in Form IV of the schedule to this act, and he shall notify the taxpayer by registered letter that he has made such reference. On any such reference the court shall hear and consider such matter upon the papers and evi- dence referred, and upon any further evidence which the taxpayer or the Crown produces under the direction of the court, and the decision of the Exchequer Court thereon shall be final and conclusive. EXCLUSIVE JURISDICTION OF EXCHEQUER COURT. 18. Except as hereinafter expressly provided, the Exchequer Court shall have exclusive jurisdiction to hear and determine all questions that may arise in connection with any proceeding taken under this act and may award costs in connection therewith. NO ASSESSMENT TO BE SET ASIDE FOR TECHNICAL REASONS. 19. (1) No assessment shall be set aside by a board or by the court upon the ground that there has been any error or omission in connec- tion with any proceedings required to be taken under this act or any regulation hereunder, but such board or court in any case that may come before it may deteiTnine the true and proper amount of the tax to be paid hereunder. PROCEEDINGS IN CAMERA. (2) All the proceedings of the board and of the Exchequer Court shall be held in camera if requested by the taxpayer. T.\X A DEBT DUE THE CROWN. 20. The taxes and aV interest and costs assessed or imposed under the provisions of this act shall be recoverable as a debt due to His Majesty from the person on whom it is assessed or imposed. RECOVERY OF TAX, ETC. 21. Any tax, interest, costs, or penalty that may be assessed, re- covered, or imposed under this act may, at the option of the minister, be recovered and imposed in the Exchequer Court of Canada or in any other court of competent jurisdiction in the name of His Majesty MINISTER TO ADMINISTER ACT REGULATIONS. 22. The minister shall have the administration of this act and the control ana management of the collection of the taxation levied hereby and of all matters incident thereto, and of the officers and persons employed in that service. The minister may make any regulations deemed necessary for carrying this act into effect. 28 WAR TAXATION OF INCOMES. APPOINTMENT OF OFFICERS TO ADMINISTER, ACT, AND THEIR SALARIES. 23. The governor in conncil may from time to time appoint officers and other persons to carry out this act or any order in council or regulations made thereimde.r, and the governor in council may assign the names of ofl&ce of such officers and other persons, and grant such salaries or pay for their soivicoLS and responsibilities as he deems necessary and reasonable, and may appoint the times and manner in which the same shall be paid. FIRST RETURN UNDER ACT, FEBRUARY 28, 1918, AND 1917 FIRST YEAR's INCOME TO BE TAXED. 24. The first return to be made by taxpayers under section 7 of this act shall be made on or before the 28th day of February, 1918, and all taxpayers shall (subject to the provisions of subsection 2 of section 4) be liable to taxation in respect of their income for the year ending the 31st day of December, 1917, and for each year thereafter, as provided by this act. (Schedule oi forms omitted.) Coviparative table of rates in Great Britain, < 'anuria, ami United States on portions of income over ,^5.000. Portion of income. S5,(X)0-S6,000 S6,00t)-S7,500 S7,50t«10,000 S10,000-$12,500 S12,5n0-SI5,00r) $15,000-?2n,000 $20,000-$25,000 S2.5,000-.?30,000 S30, 000-535,000 $35, 000-840,000 «40, 000-845, 000 845,000-850,000 $60,000-860,000 860,000-875,000 876,000-580,000 SSO, 000-8100, 000 8100, 000-SI.50, 000 $160,000-5200,000 8200,000-8250,000 8250, 000-8300, 000 8300,000-8400,000 8400,000-8500,000 8500,000-8600,000 8600,000-8750,000 $750,000-8800,000 8800,000-81,000,000 $1,000,000-81,500,000.... $1,600,000-82,000,000.... Over $2,000,000 Great Britain, 1918. Normal tax. US. 1 18. 122. 126. 75-22. 6 75-22. 6 5 -26. 25 25-30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 30 Su- per- tax. 5 7.5 10 12.5 16 17.5 17.5 20 20 22.5 22.6 22.5 22.5 22.5 22.5 22.5 22.5 22.5 22.6 22.6 22.5 22.6 22.5 22.5 22.5 22.5 Total per cent. 1 IS. 75-22. 6 1 18. 75-22. 6 1 22. 5 -26. 25 ' 31. 26-36 37.5 40 42.5 45 47.5 47.5 50 60 62.6 52.6 52.6 .52.6 52.5 52.5 .52.5 52.5 .52.5 52.5 .52.5 52.5 62.5 52.5 52.6 52. 6 52.5 Canada. 1918. Nor- mal tax. Sur- tax. .9 .9 1.2 1.2 1.4 1.4 1.4 1.4 1.9 1.9 2.4 2.4 4.35 4.35 11.9 11.9 11.9 13.65 13. 66 15.4 15.4 17.15 18.9 18,9 18.9 Total per 4 6.3 6.3 ■9.9 9.9. 9.9 13.2 1.3.2 15.4 15.4 15.4 15.4 20.9 20.9 26.4 26.4 33.36 33.35 45.9 45.9 46.9 52. 65 52.66 50.4 59.4 66.15 72.9 72.9 72.9 United States, 1917. Addi- Nor- tional tax. mal tax. 1916 1917 4 1 4 1 4 2 4 3 4 4 4 6 4 1 7 4 1 7 4 1 7 4 1 7 4 2 10 4 2 10 4 2 10 4 3 14 4 3 14 4 4 18 4 5 22 4 fi 26 4 7 30 4 8 34 4 9 37 4 9 37 4 10 40 4 10 40 4 10 46 4 10 46 4 11 .60 4 12 60 4 13 60 To- tal. 5 5 B 7 8 9 12 12 12 12 16 16 18 21 21 26 31 35 41 46 60 60 54 54 59 ,59 65 66 67 1 These rates apply only to the earned and nneamed portions, respectively, of the whole income if its total amount is between the limits shown in column 1. In the case of incomes above 812,600 the full nor- mal tax instead of these reduced rates is applied to the portions of income below $12,500. FRANCE. INCOME-TAX LAWS IN EFFECT JANUARY 1, 1918. General Income Tax. [Sees. 5-25 of the law of July 15, 1914, as amended by sec. 5 of the law of Dec. 30, 1916; thelawofFeb. 23, 1917; and sees. 49-50 of the law of July 31, 1917.] (Journal Officiel, July 18, 1914; Dec. 31, 1916; Feb. 25, Aug. 1, 1917.) Sec. 5. A general income tax is hereby imposed. Sec. 6. The general income tax shall be due on the 1st of January of each year from all persons domiciled in France. Any person shall be deemed to be domiciled in France who has a dwelling at his disposal there either as owner, occupier, or tenant: Provided, That m the last case the tenancy is one secured by a single lease or by successive leases for a continuous term of not less than one year. Sec. 7. If a taxable person has only one residence, the tax shall be levied at the place of such residence. If he has several residences, he shall be liable to the tax at the place known as his principal establishment. Sec. 8. Every head of a family is liable both as regards his own income and that of his wife and other members of the family living with him: Provided, That taxable persons may request separate assessments : (1) When a wife with a separate estate does not live with her husband. (2) When the children or other members of the family, except the husband or wife, derive an income from their own work or from a fortune independent of that of the head of the family. Sec. 9. The following are exempt from the tax: (1) Persons whose taxable incomes do not exceed the sum of 3,000 francs, increased, if need be, as provided by section 12; (2) Ambassadors and other foreign diplomatic agents, including consuls and consular agents of foreign nationality: Provided, That the countries they represent extend similar privileges to French diplomatic and consular agents. Sec. 10. The tax shaU be levied on the total amount of the net annual income of each taxable person. Such net income shall be determined with due regard to the personal and real property of the taxpayer, the professions exercised by him, the wages, salaries, pensions, and life annuities enjoyed by him, and the profits derived from any gainful occupation in which he may be engaged, after deducting: (1) Interest on loans and debts owed by him. {2) Arrears of the rents obligatorily due by him. 29 30 WAR TAXATION OP INCOMES. (3) All direct taxes or taxes assimilated thereto paid by him. (4) Losses incurred in the conduct of any agricultural, commer- cial, or industrial enterprise. . The taxable income correspondmg to the different sources ol income enumerated above shall be determined every year on tne basis of the receipts from each source during the preceding year. In the case of mcomes subject to a special tax levied by means ot assessment lists, the taxable person shall have the right to determine the amoimt of such income according to the regulations fixed lor the assessment of such special tax. Sec. 11. Persons not Mving in France, although having one or more residences there, shall have their taxable income fixed at an amount equal to seven times the rental value of such residence or residences, unless the income derived by the taxable person from property, busi- ness, or profession, located or exercised m France, reaches a higher figure, in which case the latter shall constitute the basis for taxation. Sec. 12. Married persons shall be entitled to an abatement of 2,000 francs from their annual income. In addition, every taxable person shall be entitled to an abatement of 1,000 francs for each person de- pendent on him, if the number of such persons does not exceed five. For each after the fifth, the abatement shall be 1,500 francs. Sec. 13. The following shall be deemed to be persons dependent on the taxable person, provided they have no income distinct from that on which the latter is assessed : (1) Parents and relatives over 70, or invalids. (2) Descendants, or adopted children if under 21, or invalids. Sec. 14. Each taxable person shall be taxed only on such part of his income as exceeds, after applying the provisions of section 12, the sum of 3,000 francs. Sec. 15. The tax shall be computed by adding together — One-tenth of the portion of the taxable income included between 3,000 and 8,000 francs; Two-tenths of the portion included between 8,000 and 12,000 francs : Three-tenths of the portion included between 12,000 and 16,000 francs; Four-tenths of the portion included between 16,000 and 20,000 francs; Five-tenths of the portion included between 20,000 and 40,000 francs; Six-tenths of the portion included between 40,000 and 60,000 francs; Seven-tenths of the portion included between 60,000 and 80,000 francs ; Eight-tenths of the portion included between 80,000 and 100,000 francs; Nine-tenths of the portion included between 100,000 and 150,000 francs; and the whole of the excess of income beyond this; and applying to the figure so obtained, the rate oi 12.5 per cent. On the tax so computed, every taxable person is entitled to a reduc- tion of 5 per cent for one dependent, of 10 per cent for two depend- ents, of 20 per cent for three dependents, and so on, each dependent after the third entitling him to an additional reduction of 10 per cent: Provided, That the total reduction may not exceed one-half of the tax. FEANCE. 31 Sec. 16. Taxable persons shall make a return of their total in- come, giving fuU data as to the sources of such income. They shall give in their return full information concerning those dependent on them. In order to avail themselves of the deduction provided for by section 10, they must fiu'thermore indicate in their return the amount and nature of the losses and debts which they have deducted from their total income, in accordance with section 10. Eeturns shall be made on, or according to, forms prescribed by administrative regulation, and shall be filed within the first three months of each year. Taxable persons failing to file a new return shall be deemed to to reaffirm their previous return. Keturns, duly signed, shall be left with, or mailed to , the collector of direct taxes, who shall acknowledge receipt of them. Sec. 17. The collector shall verify the returns, and may request tax- able persons to furnish explanations. He may correct returns: Pro- vided, That in such case, before making any entry in the tax register, he shall notify the taxable person as to the d.ata on which his assessment is to be based and grant him an opportunity to be heard, or to file his acceptance, or his objections, and to present such evidence as may be required whenever abatements are claimed under sections 10, 12, and 15. If disagreement still exists, legal relief may be sought by the taxable person, after publication of the assessment list. If the insufficiency of an income return is detected after the set- ting up of the assessment list, the amount of tax corresponding to the deficiency may be claimed from the taxable person either in the same year or within the next five years. • If such claim is introduced, the court before which the case is brought shall examine the reasons presented by the authorities and by the taxable person and shall determine the basis for taxation, the burden of proof resting with the authorities. Sec. 18. The amount of the tax shall be increased 10 per cent for any taxable person who fails to make a return within the period pre- scribed by section 16. Wherever a taxable person has filed an understatement of his income, such person must pay, in addition to the taxes assessed against the real amoimt of his taxable income, a sum equal to the portion of the said taxes which corresponds to the income not declared : Provided, That such additional tax shall apply only in case the ascertained deficiency exceeds one-tenth of the taxable income. Sec. 19. Any taxable person who fails to make a return or to reply to the request from the collector for explanations shall be taxed offi- cially {taxe d' office ') . In case of disagreement with the tax administration, the person taxed officially may obtain discharge or abatement of the tax assessed against him in the courts only by presenting conclusive evidence proving the exact amount of his income, and bearing the cost of the proceedings, including examination fees. However, if his income, as determined by the proper authorities, should not exceed by more than 10 per cent the amount returned by him the costs shall be borne by the Government. 1 The